Retail Bankruptcies Drop 60% to Lowest Level in a Decade

Retail Bankruptcies Drop to Lowest Level in Decade

Retail bankruptcies dropped from 52 in 2020 to 21 last year, Axios reported Thursday (Jan. 20), citing research by S&P Global Market Intelligence.

The 21 bankruptcies in 2021 matched the lowest number in the past 10 years, according to the report.

“Retail bankruptcies plummeted by more than half in 2021, matching the lowest level notched over the past decade,” achieved both in 2013 and 2014, the report stated. The 52 bankruptcies in 2020 matched the number in 2010. There were 45 bankruptcies in 2011 and 41 in 2017.

The precipitous drop in bankruptcies could mean that we’re at the end of the decimation of the retail industry triggered by the ongoing spread of the pandemic across the U.S. and around the world, but it certainly shouldn’t be taken as a sign that trouble is completely over in that sector, according to the report.

Tailored Brands, J.Jill, Belk and other retail companies are still on rating agency watch lists, the report stated.

Some of the drop in bankruptcies may have been a function of low interest rates helping retailers pull themselves out of the depths of debt, assuming they survived the early stages of the pandemic to begin with, Digital Commerce 360 reported Tuesday (Jan. 18).

“Low interest rates meant struggling companies could borrow at little cost, and strong consumer spending, helped by government stimulus checks and an expanded child tax credit, boosted retail sales,” the report stated.

Digital Commerce 360 reported there were only six companies with “sufficient online revenue” that filed for bankruptcy in 2021, down from 25 in 2020: Belk Inc. and Christopher & Banks Corp. (January), Solstice Marketing Concepts LLC (February), Paper Source (March), The Collected Group (April) and Alex and Ani LLC (June).

Christopher & Banks and Paper Source were subsequently acquired after declaring bankruptcy, according to the report.

Meanwhile, big-name retailers are expanding the definition of “storefront” in an effort to stay relevant, especially as the pandemic continues to rage on. That includes shop-in-shop concepts, such as Apple products available in Target stores, joining Disney, Ulta Beauty and Levi Strauss & Co.

Read more: How Retail is Turning Closed Stores Into New Opportunities